The Amazon Store? Maybe Try an In-Store Shop First

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The Amazon Store? Maybe Try an In-Store Shop First

A recent Wal-Mart ad for Amazon's Kindle and Kindle Fire

Five years ago, Amazon sold no physical merchandise of its own. Today, it sells five Kindle devices — more, if you count models with or without advertising or 3G wireless — plus a wide range of cables and accessories, both for the Kindle and now, for other devices. Amazon's shift from electronics retailer to electronics manufacturer was scoffed at by many at the time, but it's since transformed the company.

Nevertheless, Amazon still has nowhere near as much company-branded hardware as Apple or even Microsoft. It sells the bulk of its Kindles through its own online superstore. It's managed to get Kindle readers into retail stores all over the U.S. without hanging up a single shingle. So why would Amazon be interested in opening up a boutique shop of its own?

Amazon sources close to the situation have told us that the company is planning on rolling out a retail store in Seattle within the next few months. This project is a test to gauge the market and see if a chain of stores would be profitable. They intend on going with the small boutique route with the main emphasis on books from their growing line of Amazon Exclusives and selling their e-readers and tablets.

Amazon can experiment with selling its books and electronics at its stores in Washington (where it already pays sales tax), then partner up with its existing retail outlets to transfer that knowledge to them and train their employees. Target puts up the shingle, Target pays the sales tax, Target gets you to walk out with a Kindle Fire when all you wanted to buy were tube socks.

Apple has been successful with its retail stores for reasons that are almost entirely specific to Apple. There is no reason, besides ego, for any company to mimic Apple's approach unless that approach is a good fit for their business. Amazon CEO Jeff Bezos has plenty of ego, but he isn't foolish.

[T]he challenge for retailers isn’t “how do we mimic the Apple Store” or any other store that seems like a good model… There isn’t one solution. Each retailer will need to find its own unique formula. But I can say with confidence that the retailers that win the future are the ones that start from scratch and figure out how to create fundamentally new types of value for customers.

Amazon simply doesn't make enough of its own merchandise, even including books, to justify anything with a larger footprint than that — especially when it's already probably selling most Kindles at break-even or a loss.

The only way it could work, given Amazon's current product line, is if Amazon used the stores to sell all electronics that feature Amazon services — for instance, smart TVs, game consoles and media players that connect to Amazon Video on Demand.

There's one other possibility: Amazon could be planning to substantially expand its product line before the end of the year — smartphones, set-top boxes, an iPad-sized tablet — anything that could justify an Apple-sized investment in physical retail. Since we're just talking about rumors anyways, let's go ahead and get that one started right now.